What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to maturity if YTM is 9.9% APR?O A. $976.40O B. $1,708.70OC. $1,464.60D. $1,220.50

Bond value is the current worth of a bond on the basis of the present value of all the cash flows a…

Answered: What must be the price of a $2,000 bond…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may be called in 4 years at a call price of 1,060. The bond sells for 1,100. (Assume that the bond has just been issued.) a. What is the bonds yield to maturity? b. What is the bonds current yield? c. What is the bonds capital gain or loss yield? d. What is the bonds yield to call?
Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to maturity if YTM is 9.9% APR? O A. $976.40 В. $1,708.70 С. $1,464.60 D. $1,220.50
What must be the price of a $1,000 bond with a 5.8% coupon rate, annual coupons, and 15 years to maturity if YTM is 10.5% APR? O A. $652.49 OB. $913.49 O C. $521.99 O D. $782.99
What must be the price of a $5,000 bond with a 6.5% coupon rate, semiannual coupons, and five years to maturity if it has a yield to maturity of 9% APR? ..... O A. $6,308 B. $3,604 C. $5,407 D. $4,505
What must be the price of a $5,000 bond with a 6.6% coupon rate, semiannual coupons, and ten years to maturity if it has a yield to maturity of 8% APR? A. $5,429 OB. $3,619 OC. $6,334 OD. $4,524
What must be the price of a $10,000 bond with a 6.3% coupon rate, semiannual coupons, and ten years to maturity if it has a yield to maturity of 9% APR? OA. $11,542 B. $8,244 C. $9,893 OD. $6,595
What is the coupon rate of a ten-year, $10,000 bond with semiannual coupons and a price of $9,558.57, if it has a yield to maturity of 6.6%? OA. 7.188% OB. 5.99% OC. 4.792% OD. 8.386%
What must be the price of a $5,000 bond with a 7% coupon rate, semiannual coupons, and eight years to maturity if it has a yield to maturity of 11% APR? OA. $3,954 OB. $4,745 OC. $3,163 OD. $5,535 H Search (XI)
What is the approximate price of a bond that matures in two years (T= 2), with a face value of $1000 (F= $1000), and an annual coupon payment of $50 (C = $50), if the interest rate is 6 percent? $1056.67 $1100.00 $876.33 $981.67
How much would you be willing to pay for a $1,000 bond that has a coupon rate of 7%, with 14 years left until maturity, if the current market rate is 10% O $832.96 O $1,069.78 O $779.00 O $1,350.61

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Pfin (with Mindtap, 1 Term Printed Access Card) (…

Finance

ISBN:

9780357033609

Author:

Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:

Cengage Learning

Personal Finance

Finance

ISBN:

9781337669214

Author:

GARMAN

Publisher:

Cengage

SEE MORE TEXTBOOKS

What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to maturity if YTM is 9.9% APR? O A. $976.40 O B. $1,708.70 OC. $1,464.60 D. $1,220.50